Making the Transition to Early Retirement: Our 5 Year Plan

After celebrating the achievement of Lean FI/RE a couple months ago, it finally dawned on us that we are just months away from reaching Financial Independence and should probably start planning for what we’ll do once we actually get there. The Fioneers recently wrote a great post about creating their 5 year plan, which inspired me to do the same.

Now that I’m retired and Mr. RFL is about to become “work optional,” it’s time to formalize a game plan for transitioning to early retirement.

If you don’t have a plan for once you reach early retirement, I recommend checking out the Fioneers’ post here.

Having a good plan can both motivate you and keep you moving in the right direction. Things get more complicated when there’s a partner and/or kids involved. Don’t underestimate the amount of time or effort it will take to create one (like I did).  

Creating our 5 Year plan

Naively, we sat down one evening thinking we could knock out our 5 year plan over a glass of wine. Not even close!

It turns out that we have several things we want to do in retirement, and trouble making decisions (mostly me). Luckily, Mr. RFL and I have a lot in common and tend to agree on the important things. However, there are so many directions we could envision our lives going. Sometimes more options are good, but other times they just make decisions more difficult.  

In the end, it took a couple attempts and over a month to finally come up with our 5 year plan. Although, technically it’s closer to a 6 year plan.

Although I’m sharing this plan with you below, keep in mind that our plans are not set in stone. Nor should yours be.

Mr. RFL and I are big fans of what we call the “loose plan.” It’s how we approached our travel when living abroad, and how we try to approach most things in life. Admittedly, this approach to life is a little more challenging now that we’re also responsible for a young child. Loose plans provide a path to follow, but also allow exploration of other paths that may arise along the journey. I find that it also helps to reduce my stress or frustration when things don’t go as planned.

Creating a plan was tricky since some of our wants are mutually exclusive.

For example, you can’t simultaneously live abroad and travel North America in an RV and build a homestead near your fixer-upper. Yet, these are all things I would love to do in early retirement.

However, rather than choose only one of these options, we decided to cram some version of each into our plan. Over the next few years, we’ll continue to evaluate and tweak the plan as needed.

As of today, here is the 5 year plan we created:

We expect to achieve financial independence in January or February 2022.

Mr. RFL will continue to work full-time for 3 – 4 more years. Although no job is perfect, he currently enjoys his work. The position pays well, is low stress, and rarely requires working long hours. Mr. RFL is also 4 years younger than me, so doesn’t mind putting in a few more years to add some financial flexibility to our retirement.  If he changes his mind though, he’ll switch to a part-time remote position and/or we’ll move our timeline up a year.

At some point during this time, we will sell one of our two cars.  If Mr. RFL switches to a part-time role or one of our cars needs excessive repairs, we’d do it at that time. Otherwise, we’ll probably hold off until Mr. RFL fully retires.

Year 5 is where it starts to get interesting …

A couple months after Mr. RFL retires, we’ll downsize our belongings and sell our home in Arizona.

Once school is out in May 2026, we’ll begin our year of travel & homeschooling (or world-schooling)!  

In 5 years, our daughter will have just completed the third grade. We thought 4^th grade would be the perfect time to homeschool and travel as a family. So apparently does the National Park Foundation – that’s the year they give all school kids a free pass to the parks.

We decided not to move abroad long-term, so we’ll get our international fix by slow travelling around Europe for a 2–3 month period at the start or end of our travel year.

The remainder of the year will include 6 – 9 months of RV’ing across the United States & Canada. We’ll visit National Parks, family, and anywhere else we want to explore or are still considering as a final destination.

During that year, we’ll homeschool our daughter on the road. More importantly, we’ll provide her with some unforgettable memories and experiences. And hopefully a healthy appreciation for other cultures and nature.  

We’ll spend the last month or two of the year getting settled in our new hometown, where she’ll go back to public school for her 5^th grade school year.

As for our next home? Ideally, we’d like another fixer-upper that has good bones, in a great location, and on a large lot. Okay, also ideally with a killer mountain view. We’ve enjoyed fixing up our current home, but think it would be a lot more fun once we’re not working. From there, we may build a small homestead, or flip the home and buy another fixer (on which to build our homestead).

Why wait 5 more years for our “Adventure” year?

Although it’ll be nice to have some extra money saved, our primary reasons for delaying this adventure relate to our child. I told you kids complicate things.

We don’t want to stay in the Phoenix metro long term, but we also don’t want to uproot our daughter multiple times during her school years. Additionally, we have family nearby, so it’ll be nice to have additional time with them before we move away. Finally, we feel that our daughter is currently too young to remember or appreciate the experience.

Financially, it makes the most sense to take this travel year when we don’t own a home, to avoid duplicate housing costs. That’s why we’re currently planning to travel in between selling this home and buying our next one. The biggest negative with this approach, is that it will force us to pay cash for our next house, since we won’t have the income needed to get a mortgage.

An alternative option we’ve considered, is to buy our next home as an investment property before Mr. RFL quits and rent it out immediately and throughout our travel year. This option only makes sense if we end up moving somewhere with a great rental market, housing prices come down, and we buy a home that’s immediately rentable. It also would add stress and reduce flexibility if we decided to change our plans. For these reasons, we’ll probably stick with the wait and see approach.

Things to do and figure out over the next 5 years (before we retire and uproot our family)

Figure out where we want to live

This is the biggest question. There are so many places we can see ourselves living out our early retirement years. Some are places that we’ve been and love, while others we’ve yet to visit, but the characteristics and vibe of the locations appeal to us. With a child to consider, climate change, and a long wish list, this question is a tough one. It’ll require its own blog post at some point, though I’m still open to suggestions.  

Test drive RV life (literally)

As mentioned above, our current plan is to homeschool our daughter on the road, spending most of her 4^th grade year traveling the country in an RV. However, the big unknown in that plan… Will we actually like van life?

I love road trips, and I enjoyed driving and camping around Iceland for a week a few years ago. However, 6 – 9 months is a long time. Spending that much time “roughing it” in a small space might get old.

We’ll need to test this out once or twice over the next few years. We’ll also need to get plugged in to the full-time RV community to see if this is something we really want to do for an extended period before buying a used RV.

Try out homesteading

Another big part of my future dreams include building a small homestead that provides at least some of our food and other needs. I’ll admit that this one is more my dream than Mr. RFL’s, but he seems to enjoy watching the off-the-grid and homesteading TV shows with me.

Although we won’t buy any animals here in Arizona, I’ll need to at least learn how to successfully garden. Otherwise, I may as well just chuck the homesteading idea out the window. So far all my gardening attempts have been big fat failures, but I’m not giving up yet.

There is something about making things from scratch that just feels so romantic to me. I think any early retirement will include at least some of these features. The question will be to what extent. If we decide not to homestead, we’ll need less pastoral land for our next property, and can focus on buying a great view instead.

Prepare a financial plan for how we’ll fund our trip and early retirement years

Currently we have a (very) loose strategy for how to pay for early retirement, but we haven’t worked out the logistical details yet.

Before Mr. RFL pulls the rip cord, we’ll need a solid drawdown plan and budget for the next 5 years and beyond.

We’ll also think through ways to optimize taxes along the way. Some of this plan will depend on how well our portfolio actually does, as well as Mr. RFL’s actual retirement date and income. It will also depend on several other factors, such as our plans for hobbies, expected cost of living, whether we buy a fixer upper or not, changes in spending trends, etc. Either way, 5 years out is a good time to start getting a plan together.

Think about what we’ll do after settling down in our new location.

Leaving the corporate world was harder than I expected it to be, and it was a real challenge to find my purpose. I suspect that after a similar tenure in the corporate world, my partner will struggle as well. He’s more of a planner than I am, so it will be especially helpful for him to think through all the different hobbies and things that he wants to do both on his own, and together.

Ideas we’ve thrown around… woodworking (possible Etsy store), volunteering, DIY projects, gardening, writing & performing music, hiking, cooking, camping, travel, blogging (me), technical content/e-course creation or teaching (Mr. RFL).

Luckily, we’ve got plenty of glasses of wine between now and then to have these conversations. And we’ll be sure to take you along for the journey.

Have you created your own 5 year plan yet?

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